HMRC has issued guidance highlighting instances in which taxable persons who are not the owners of relevant goods recover import VAT incorrectly as input tax, setting out the correct treatment to be applied in all cases from 15 July 2019.
The two ways in which this incorrect treatment can occur involve:
toll operators, who import goods such as pharmaceutical products for clinical trials and distribute them within the UK on behalf of a customer, without taking ownership of the goods or reselling them; and
situations where title has passed before goods are imported.
Toll operators who act as ‘importer of record’ on UK import declarations, pay import VAT to HMRC and receive import VAT certificates, are known in some cases to claim a corresponding deduction for input tax under VATA 1994 s 24.
The correct procedure is for the overseas owner to be the importer of record and reclaim the import VAT under the thirteenth VAT directive if registered for VAT overseas.
In some situations, businesses sell on the goods just before importing them into the UK but continue to act as ‘importer of record’, pay import VAT to HMRC and receive import VAT certificates. Where title has passed before goods are imported, the correct procedure is for the new owner to be the importer of record and make a claim using the import VAT certificate.
HMRC has no evidence to suggest the businesses concerned have knowingly applied the wrong treatment and will not seek to correct input VAT deductions made in error before 15 July, provided there is no risk of duplicated claims.
From 15 July onwards, HMRC will only allow claims for input tax deduction made using the correct procedures.
See ‘Revenue and Customs Brief 2/2019: Import VAT deducted as input tax by non-owners’ (bit.ly/2VM0njf).
HMRC has issued guidance highlighting instances in which taxable persons who are not the owners of relevant goods recover import VAT incorrectly as input tax, setting out the correct treatment to be applied in all cases from 15 July 2019.
The two ways in which this incorrect treatment can occur involve:
toll operators, who import goods such as pharmaceutical products for clinical trials and distribute them within the UK on behalf of a customer, without taking ownership of the goods or reselling them; and
situations where title has passed before goods are imported.
Toll operators who act as ‘importer of record’ on UK import declarations, pay import VAT to HMRC and receive import VAT certificates, are known in some cases to claim a corresponding deduction for input tax under VATA 1994 s 24.
The correct procedure is for the overseas owner to be the importer of record and reclaim the import VAT under the thirteenth VAT directive if registered for VAT overseas.
In some situations, businesses sell on the goods just before importing them into the UK but continue to act as ‘importer of record’, pay import VAT to HMRC and receive import VAT certificates. Where title has passed before goods are imported, the correct procedure is for the new owner to be the importer of record and make a claim using the import VAT certificate.
HMRC has no evidence to suggest the businesses concerned have knowingly applied the wrong treatment and will not seek to correct input VAT deductions made in error before 15 July, provided there is no risk of duplicated claims.
From 15 July onwards, HMRC will only allow claims for input tax deduction made using the correct procedures.
See ‘Revenue and Customs Brief 2/2019: Import VAT deducted as input tax by non-owners’ (bit.ly/2VM0njf).
